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BP delays Alaska offshore oil field for custom rig review

Jill Burke

With drilling plans halted last year pending an equipment review, when will BP reach its Liberty offshore oil prospect in Alaska’s Arctic?

Around the same time the Deepwater Horizon drilling rig, contracted by BP, disastrously attempted to set new depth records in the Gulf of Mexico, BP had another technologically remarkable project under way in the Arctic. From an island-based well in Prudhoe Bay in northern Alaska, BP’s Liberty project was set to bore beneath the Beaufort Sea and snake through miles of bedrock to reach a 100-million-barrel reservoir.

Whether BP will pull it off remains to be seen. No drilling has begun. No big profits have started to flow.

Had the company started drilling this year as planned, BP had expected Liberty would be producing 40,000 barrels of oil a day -- worth more than $4 million a day at current oil prices -- by 2013. 

BP hired Parker Drilling to custom-build a rig capable of drilling two miles down and six to eight miles across to reach its target. Such ultra-extended-reach drilling is on the cutting edge of drilling technology, and BP has shown great pride in the potential of its long-distance wells.

The technology is increasingly being deployed to tap once-difficult-to-reach oil fields. In May 2008, for instance, a well in the Middle East’s Arabian Peninsula set a world record for horizontal drilling. Looking to tap an offshore in the North Sea, Maersk Oil & Gas drilled its way 7.6 miles to Qatar’s Al-Shaheen Field, with 6.7 of those miles along a horizontal path. 

At first, BP slowed the project amid the post-Deepwater Horizon regulatory clampdown. Then the company slowed down further, halting installation of the one-of-a-kind rig needed to drill Liberty. Nearly a year later, the rig is still not in operation. BP has been conducting a “design and engineering review” for some time following a decision to stop dealing with incremental problems as they surfaced during the rig’s installation.

The rig “has a big job to do, and we need to be confident that all systems are go,” said BP spokesman Steve Rinehart in a recent interview. “The project itself is moving forward. We need to make sure that the rig is up to spec.”

Rinehart would not say how much of the rig had been built before continued construction was called off in Nov. 2010. At the time Rinehart explained the work stop to Reuters as a way for the company to “review the huge rig's safety systems, including power and mud-handling systems.”

Only when the design review is complete will the company begin to craft a new drilling timeline, he said.

Promising technology

The potential for extended-reach drilling to help deliver more of Alaska’s oil and gas to market has renewed interest in accessing oil in environmentally and politically sensitive areas.

As recently as August, U.S. Sen. Lisa Murkowski was touting its benefits as a way to responsibly target the some 10.4 billion barrels of oil thought to exist within the part of the Arctic National Wildlife Refuge designated for oil and gas exploration.

“Now is the time for us to open ANWR for development,” Murkowski said in a prepared statement responding to recommendations that directional drilling be tested as a way to enter ANWR. She called it “a commonsense solution that everyone should be able to embrace.

“We need to develop our own domestic resources instead of continuing to rely on foreign oil,” she said.

Regulators still must review drilling plan

Last month, the Alaska Oil and Gas Conservation Commission held hearings on the safety and effectiveness of its policies for blowout preventers and extended-reach drilling. The commission regulates drilling activity on state land and has jurisdiction over Liberty’s wellhead at Endicott Island, from which BP plans to drill its well. Before it can do so, BP will need approval from the state commission and the U.S. Bureau of Ocean Energy Management.

Contact Jill Burke at jill(at)alaskadispatch.com.